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Lloyd's of London to divest from coal over climate change

The Lloyd’s building, home of Lloyd’s of London.Photograph: Jack Taylor/Getty

Lloyd’s of London, the world’s oldest insurance market, has become the latest financial firm to announce that it plans to stop investing in coal companies.

Lloyd’s will start to exclude coal from its investment strategy from 1 April. The definition of what is a coal company and the criteria for divestment will be set over the coming months.

The firm has long been vocal about the need to battle climate change, with insurance one of the worst affected industries by hurricanes, wildfires and flooding in recent years.

The insurance market decided last month to implement a coal exclusion policy as part of a responsible investment strategy for the central mutual fund that sits behind every insurance policy written by the Lloyd’s market.

Inga Beale, Lloyd’s of London chief executive, told the Guardian: “That means that in the areas of our portfolio where we can directly influence investment decisions we will avoid investing in companies that are involved mainly in coal.”

Lloyd’s does not underwrite operations directly, but offers a marketplace to almost 90 syndicates of other insurers.

Lloyd’s has been slower to take action than others. Other big UK and European insurance companies, including Aviva, Allianz, Axa, Legal & General, SCOR, Swiss Re and Zurich, have been shifting away from coal and other fossil fuels due to concerns about climate risks. About £15bn has been divested by insurers in the past two years, according to a recent report from Unfriend Coal Network, a global coalition of NGOs and campaigners including 350.org and Greenpeace. It said 15 companies – almost all in Europe – have fully or partially cut financial ties by selling holdings in coal companies and refusing to insure their operations.

Insurance companies are perhaps also mindful of the danger that they could suffer a huge loss if their investments in fossil fuel companies were rendered worthless by action on climate change, as the Bank of England warned in 2015. However, some banks are still investing in coal plants, according to research from campaign groups.

Beale told the Guardian that she would be discussing the group’s new investment strategy at the World Economic Forum’s annual meeting in Davos this week.